Federal Reserve Governor Christopher Waller believes the inflation caused by President Trump's tariffs will be short-lived, calling it "transitory." He explained that while larger tariffs could push inflation to 4-5%, it will eventually ease as the economy slows and unemployment rises. Smaller tariffs would have a smaller, 3% impact. Despite the surprise of past inflation, Waller is confident this time the effects will be temporary. He also mentioned that the Fed may lower interest rates, depending on how things play out, and emphasized the need for flexibility in handling the unpredictable economic effects of the tariffs
link- https://www.cnbc.com/2025/04/14/fed-governor-waller-sees-tariff-inflation-as-transitory-in-tush-push-comparison.html
Waller’s optimism feels out of touch with the reality many Americans face. Even if tariff inflation is "transitory," its short-term impact—especially on essential goods—is significant. With rising costs and slowing growth, calling for flexibility is fair, but downplaying real-time struggles may erode public trust in Fed assessments.
ReplyDeleteRelying on economic slowdown and rising unemployment to naturally curb inflation may be valid in theory, but it raises a deeper concern: is the Fed comfortable with accepting economic pain as a primary inflation control mechanism? Also, suggesting rate cuts while simultaneously acknowledging inflationary pressures sends mixed signals. Truth be told, I believe no one will know what will happen next.
ReplyDeleteWaller's view that tariff-driven inflation will be temporary is interesting, but it assumes a lot about how quickly the economy will adjust. Even if inflation eventually cools, the immediate disruptions to supply chains and consumer prices could still leave lasting effects. It's also tricky because the Fed is trying to balance inflation control with maintaining growth, and if the situation changes faster than expected, their flexibility will definitely be tested. We're entering a phase where predicting outcomes is more complex than ever.
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ReplyDeleteWaller’s saying the inflation from tariffs won’t last, but that feels a little too hopeful. With prices already rising and the economy slowing, it’s hard to believe it’ll all just smooth out without more serious fallout.
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